Determining Site Potential
Don't overlook these tried-and-true tips to maximize land development projects.
Can a desired development
project be built on the land chosen? Commercial real estate investors
and developers must ask this fundamental question early in the
site-selection process. By taking into account a site's environmental
characteristics, stormwater management and treatment requirements,
utility access, impact fees, easement encumbrances, traffic issues, and
zoning regulations, investors and developers accurately can assess a
Site Analysis Guidelines
The following tips help owners and developers assess a site's
development potential, whether it is an office park, chain restaurant,
shopping center, or multifamily property.
Perform Thorough Due Diligence.
Many developers, especially retailers, clamor for well-located infill
sites, so a high percentage of new construction is
tear-down-and-rebuild projects. Yet redevelopment sites can be very
tricky. Surprises such as soil contamination and hidden utility lines
can be costly if discovered after construction commences. Thorough due
diligence, including a Phase 1 environmental study, is necessary.
Comply With New Regulations.
Redeveloped sites lose their grandfather status once the original
buildings are torn down, and new uses must comply with today's
requirements. Ordinance changes can impose constrained driveway access,
enlarged setbacks or buffers, and other restrictions, so existing
buildings are not always indicative of what can be built back.
Avoid Land-Driven Projects.
Land-driven development projects often originate with family members
who have inherited farms or other large undeveloped land parcels. In
most cases, the due diligence process is overlooked because no title
attorney or lending institution is involved to impose a proper
investigation. Yet myriad problems may exist. For instance, portions of
the land may have environmental constraints, and cleaning up tainted
soil and rock or contaminants may be costly. It's important to remind
land owners who wish to develop their existing parcels that a site
evaluation is critical.
Look Beneath the Surface. Remediation
is the burden of anyone who owns a contaminated site, even if the
current owner isn't responsible for the pollution. Developers should be
aware of potential problems before purchasing a site by ordering a
Phase 1 environmental analysis to discover what secrets the soil holds.
Check for Jurisdictional Wetlands.
As defined by the U.S. Army Corps of Engineers, wetlands are not just
areas of standing water; they also include woodlands where groundwater
rises to a certain height underneath the ground's surface during the
growing season. A certified wetlands delineator should check the
development site, because ground cannot be disturbed within a
designated wetlands area. Know Stream Buffer Regulations. In
addition to wetlands, many state and local jurisdictions administer
stream buffer regulations, which prohibit land disturbance within 50
feet to 100 feet of even intermittent streams. Thus, frequently
intermittent streams running through a site can disqualify it from
certain uses such as big-box retail. Local regulations experts can
investigate a site's characteristics and assess its stream buffer
Confirm Air-Quality Regulations.
Air quality rears its head in some land development projects. For
example, any 750-car-or-more parking facility must file a report
demonstrating air-quality standards compliance with the state
environmental agency. The approval procedure on this can take up to 90
Take Measures to Reduce Impact Fees.
Local governments charge developers impact fees for water and sewer
connections, school construction, and transportation improvements to
recover growth's cost to the community. The existence and amount of
impact fees varies widely from municipality to municipality. For
example, an analysis of a proposed 100,000-square-foot retail center in
two different municipalities found that impact fees would be around $10
per square foot in one location and $3.50 psf in the other.
developers often can reduce impact fees by applying for building
improvement credits, such as deducting the cost of widening a road from
the transportation impact fee. Developers also should investigate
reimbursement eligibility. Some municipalities reimburse developers for
road construction and utility extensions if such facilities are part of
a city's plan.
Beware Prescriptive Easements. Developers
can determine easements' existence by performing a title search, but
such searches typically won't uncover prescriptive easements, or
nonrecorded uses of a property. For example, if an adjoining property
owner has used a driveway over the subject property for a 20-year
period, he may have a prescriptive easement over the property, even if
the agreement wasn't formally recorded. Since prescriptive easements
are legally enforceable, developers should be aware of all nonrecorded
agreements on the site.
Understand Local Flood Zone Regulations. Failing
to understand flood zone regulations is one of the greatest development
pitfalls, especially since regulations vary widely. For instance, some
jurisdictions allow developers to fill in the fringes of a flood plain
while others won't. Many
jurisdictions enforce flood plain development standards that are
stricter than Federal Emergency Management Agency requirements.
Although FEMA oversees the National Flood Insurance Program, local, not
federal, ordinances determine development standards; thus, developers
must know local jurisdictions' particular requirements.
Deal With Stormwater Management Issues Upfront.
As regulations change, developers are realizing that it is much easier
to deal with stormwater management facilities at the beginning of a
project. Typically developers must allocate between 6 percent and 10
percent of a site for stormwater management. It is more cost-effective
to allot this land for ponds, sand filtration systems, or bioretention
facilities before starting construction. Creating a master stormwater
management plan can aid the process (see sidebar).
the construction phase, stormwater detention basins often are required
to deal with runoff temporarily. Developers need to learn a
jurisdiction's runoff control regulations and comply with the
Consider Locating Stormwater Facilities Underground.
In cases where the land's opportunity cost is high, such as urban
infill or redevelopment projects, locating treatment facilities
underground may be the only reasonable choice. While costing four times
or more than equivalent aboveground facilities, underground stormwater
treatment frees the entire site for development.
Know About Adjacent Zoning and Master Development Requirements. On-site
buffer requirements may depend on the adjacent land's use. Also,
adjoining development can affect stormwater runoff, utility extensions,
street exposure, and vehicular access both during and after
Issues also arise when
building in master-planned developments. Structures within such
communities must adhere to the master developer's specific
restrictions. Generally, these are aesthetic in nature, such as height
and signage restrictions.
Check for Overlay Zones. Overlay
zone requirements apply in addition to the underlying zoning and
frequently are missed in site investigations. These extra regulations
protect watersheds, historic districts, scenic views, transportation
corridors, and airport fly zones. For example, special highway overlay
districts might prohibit tree removal for the first 100 feet along a
highway's edge, or watershed protection might impose a limit on the
amount of pavement or other impervious surface a project can include. Obtain Driveway Access Permits. Developers
should discuss driveway access permits with the local transportation
department, as restrictions against new driveway cuts on certain roads
seriously can affect future customers' access. Also, developers often
must construct additional improvements to enhance the adjoining road